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S & S Power Switchgear Ltd. (S&SPOWER) - Chairman Speech

Company chairman speech

On the face of it it has been a good year and our business has grown in terms of sales& profits both in India and in the UK.

The detail numbers of each businesses are in the ensuing pages.

When you analyse the consolidated numbers you will see that in keeping with the newIndian Accounting Standards we have not considered any revenue of SSPSE (as it was JV andnot a subsidiary) and only considered 51% of profits. For the sake of clarity if we takethat into account the consolidated sales would have been Rs.1270 million as against lastyear's Rs. 1217 million and the profits would have been Rs. 49 million against last yearRs. 2 million.

This year was challenging for us as we along-with our customers suppliers &service providers had to get used to the new GST rules & processes aligned. We hadto deal with our funds being stuck with the government particularly on GST refunds forexports. However we believe that GST is a very good reform which will ultimately benefitthe consumer industry and the government.

We have adjusted to new revenue recognition norms to a new audit regime and the impactof IND-AS on items like Estimated Credit Loss. I am proud to say today that our company iswell aligned to the most rigorous accounting standards. As a company we have in last fewyears been focusing on developing closer relationships with our key Contracting Companies& Quality OEMs where our business is predictable & profitable and working capitalmanageable.

An important development this financial year has been the buying back of the shares ofSSPSE from our erstwhile JV partners M/s Coelme SA. This will give us the flexibility tosell our products everywhere in the world. We have already started reaping the benefits ofthis by getting orders from Botswana and enquiries from many new territories.

As the company we are also preparing for the future in terms of digital transformationand using IT as a business enabler. We are investing heavily on IT infrastructureimplementing SAP system and enhancing on social media presence.

Unfortunately I must say that the first quarter of 2018-19 would be challenging in asmuch as difficulties in getting customers on board to lift the equipment that they haveordered. This will impact our sales in the first quarter but we expect to make it up inthe second quarter.

Acrastyle had a very good year last year however it is facing challenges this year ingetting orders from UK utilities who are undergoing a regulatory period review andtherefore slowed down for order placements. To take care of these cycles with the DNO'swe are diversifying our customers base & developing new product & serviceofferings both for the UK & for exports. We had a big breakthrough in the UK in termsof implementing digital technology for substations with the 61850 protocol where we hadbeen associated with leading companies & utilities. This we believe is a very greatopportunity for us.

With all the changes that I have mentioned above I must appreciate the effort that ourteams in India & UK are making to face these new challenges to first un-learn andthen tore-learn some of the best practices. We have been guided in this process by ourDirectors who have given a lot of their time and wisdom to our company. We are thankfulto our Auditors and ofcourse we are thankful to you dear Shareholders for your patience& support.